I've seen Game Lethality have this effect, in a group of players that otherwise tended to choose combat solutions when it wasn't necessary.
I would also say that it would inherently encourage roleplay. In high fantasy, the heroes might be fired up at the prospect of drawing weapons and giving evil the old what-for (Especially if there's a cleric around.)
But in some of the grittier systems, people probably wouldn't look forward to combat, and would avoid it if possible. (Like most real people).
And while I would agree with the the point made previously, that character death is typically a bad thing, a high-violence campaign where the players start to realize that they probably won't die, no matter how reckless they are, can quickly spiral out of control. It doesn't always work out that way, of course, but when it does, in can really derail a campaign.
EDIT: To try to answer your question about player lethality, Hussar:
You might end up having to restrict things from the players, depending on the system. (Something many are hesitant to do). You can also up the challenges, considerably.
In general, players will always have their combat abilities increase as their characters advance. Depending on the system, though, 5-10 typical goons might be able to give them serious trouble.
If power armor is enough to get that the players have it, some of the bad guys are probably sporting it, too.
I'll wrap it up here... Maybe an issue, too, is what players want out of the game. Some people don't dig negotiation and/or intrigue. If a game with less combat isn't something they're interested in, lethality alone probably won't change it.